5 Financing Tips for Women Business Owners – 2018 Update

Women-owned businesses are the fastest growing segment of entrepreneurs in the United States and account for roughly 40 percent of the small businesses in our country. Unfortunately, “In 2014 the [House] Subcommittee on Small Business and Entrepreneurism published a report that said only 4% of the total dollar amount of business loans go to women-owned businesses,” said Peter Bolin, Experian Director of Consulting and Analytics.

With that in mind, here are five tips to help women entrepreneurs find greater success when looking for small business financing:

Don’t use your personal credit to pay for business expenses: While it’s tempting for every young company to use personal credit to get things off the ground, it’s important to start building your business credit profile by using business credit whenever possible. “Women tend to leverage their personal credit more than men do to get things started—which puts them at a disadvantage when they really need business financing down the road to grow,” says Bolin. “By avoiding potential vendor financing opportunities early on, they don’t build any kind of business credit profile, which makes it more difficult to get a small business loan.” Talk to your suppliers to see if they offer credit to their good customers and start building a strong business credit profile early in your business.

Don’t be afraid to look outside the bank: The first place most business owners (including women) look for a loan is the bank where they have their business checking and other business accounts. Unfortunately, unless you’ve been in business for a few years, have a relatively strong personal credit score, and are looking for a relatively large loan, the bank may not be very motivated to work with you. If your business is very young, you might consider crowdfunding or non-profit lenders who often offer low- or even no-interest microloans. If you’ve been in business for at least a year, an online lender like OnDeck could be an option.

Network with other women business owners: Networking at local Chamber of Commerce events or other business networking groups can be a great way to find out what other women entrepreneurs have done to be successful finding capital. The SBA has a network of business centers across the country to help women business owners and the National Association of Women Business Owners, is another great networking group.

Learn more about business credit: “Understanding your business credit is probably number one,” said Bolin. “Find out what your business credit profile looks like and how it’s created.” If you don’t know much about business credit, you’re not alone—the same is true for most business owners. The three major business credit-reporting bureaus are Experian, Equifax, and Dunn and Bradstreet. You can see how your credit is being reported now, and make sure your profile is accurate. It’s not uncommon for mistakes on your profile to hamper your ability to get a small business loan, so it’s important to do a periodic review of what yours looks like.

Talk to your suppliers: Trade credit is one of the easiest and most effective ways to build a strong business credit profile. If your suppliers don’t offer that type of credit to their customers, “…push them to do so,” says Bolin. Don’t be afraid to negotiate favorable terms for your business. And, make sure they report your good credit history to the credit bureaus. If they don’t, you might be building good credit with that particular vendor, but you’re not doing anything to build a strong business credit profile.

Women business owners struggle with many of the same issues as their male colleagues looking for financing. Although the practices outlined above might not get you a $100,000 loan from the bank today, they will help you create a stronger credit profile, build relationships with people who can help you, and improve your odds of success down the road.

I write about small business and small business finance as Editor for OnDeck. With over 30 years in the trenches of small business, I’m a Main Street business evangelist, author, and marketing veteran that makes the maze of small business lending accessible by weaving personal experiences and other anecdotes into a regular discussion of one of the biggest challenges facing small business owners today.

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